After divorce, who gets this life insurance payout?


Q. My mother and father divorced in 1982. My mom raised us three kids on her own by cleaning houses. She was killed by a drunk driver in 1993 and we moved in with my grandparents. In 2014, we received a letter from an insurance company trying to locate our father, who was the beneficiary of a policy on our mom’s life. We don’t know where he is and we don’t want him to benefit. I read that if he was still her beneficiary after their divorce, he’s automatically revoked as beneficiary. Is that true?
— Son

A. It depends.

Under N.J.S.A. 3B:3-14, the designation of a former spouse as the beneficiary of a life insurance policy is automatically revoked subsequent to divorce, said Thomas Roberto, a family law attorney with Adinolfi, Lieberman, Burick, Falkenstein, Roberto & Molotsky in Haddonfield.

But that’s not all. It says the beneficiary status is revoked unless the former spouse’s right is expressly preserved via “a governing instrument, a court order, or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage,” he said.

Roberto said a divorce settlement agreement establishing the right of a former spouse to be designated as the beneficiary of the other spouse’s life insurance coverage would be considered a “governing instrument,” “court order” and a “contract” under the statute.

Generally, a life insurance policy is required to be maintained by a former spouse if he or she has an alimony or child support obligation, he said.

“The life insurance policy serves as security for the former spouse’s support obligation in the event of his or her untimely passing,” Roberto said. “When the support obligation terminates, so does the obligation to maintain the securing life insurance policy for the benefit of the former spouse.”

The obligation to maintain the life insurance coverage, and to designate a former spouse as the beneficiary, should be set forth in the divorce agreement or order, Roberto said.

The starting point here may be to review the divorce agreement or court order and determine whether there was any obligation to maintain life insurance. If so, then the payment of the life insurance proceeds to the former spouse may be appropriate, Roberto said.

“If there is no obligation to maintain life insurance set forth in the divorce agreement or order specifically, then the former spouse’s beneficiary designation would have been revoked and he therefore would not have been entitled to receive the proceeds of the policy,” he said.

If the agreement or order does establish a life insurance obligation for purposes of securing alimony or child support, the terms of the agreement regarding when the support obligations would terminate are also key, he said.

“An alimony obligation generally terminates upon the receipt’s remarriage, and the obligation to maintain life insurance as security for alimony would terminate along with it.” he said. “The question may then become whether the policy-holding spouse took steps to notify the life insurance provider and/or modify the beneficiary designation upon the termination of the support obligation.”

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This story was originally published on June 24, 2020. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.